When hiring workers, how do you know if they are an employee or contractor, and what if they have an ABN? Sometimes it can be difficult to discern between the two, and there are some commonly held myths regarding this. For example, even if your worker holds an ABN, this has no impact on whether you should regard them as an employee or contractor. The conditions of the working arrangement between you and the worker, in regards to tax and super, will affect whether or not they should be regarded as an employee or contractor. Understanding the differences between the two and classifying your worker into the correct category for tax and super purposes is important, so how can make the correct decision?

Employee or Contractor Decision Tool

The Australian Taxation Office (ATO) provides a free tool below which can be used to discover if your worker should be treated as an employee or as a contractor for tax/super requirements. It must be noted the tool is for use by businesses that engage and pay a worker and not to be used in regard to labour hire firms or individual workers.

Click the button below to access the Employee or Contractor Decision Tool.

The Employee or Contractor Decision Tool provided by the ATO can be helpful in discerning whether to treat your worker as an employee or contractor, if however you are still unsure, please seek independent professional advice.